CHICAGO—As reported last week in GlobeSt.com, commercial real estate investors that had looked with some trepidation on the new administration have seen some of their worst fears allayed. The 2016 campaign was filled with rhetoric about immigration, trade wars and Muslim bans, but that talk wasn't much help when it was time to find workable legislative majorities or design policies that could pass constitutional muster. As a result, the avalanche of news coming out of Washington, which often feels like turmoil, partially conceals the stability in many important areas of the economy.

The failure to repeal the Affordable Care Act, for example, means the world of healthcare real estate won't be roiled by sudden changes. Considerations like that are very important to real estate investors, not least because they need to see farther ahead than others.

“There is a lot of lead time in real estate,” Allan Swaringen, president and chief executive officer of JLL Income Property Trust, tells GlobeSt.com. Even industrial buildings, the quickest type of development, take about 12 months to plan, design and build. Apartment buildings can take two to three years, and major office developments between five and six years. “It creates a whole new level of risk.”

But the trust, a daily NAV REIT with a national portfolio, has just published its first quarter results, and the still developing political situation is just one reason that Swaringen sees reasons for optimism.  

“I think we're seeing some normality return,” he says. A few months ago, he was asking, “are we going to ship millions of our workers somewhere else?” Today, however, “there is a bit of a different view.” The checks and balances built into the American system have had an impact. “Now we can say, 'OK, some of the rhetoric was just rhetoric.'” 

Furthermore, the overall economy has performed well, greatly benefitting the trust's $2.3 billion portfolio of 69 core properties, which span the retail, apartment, industrial and office sectors. In the first quarter, it achieved a total net return of 1.8% on Class M shares. It has paid dividends for twenty-one consecutive quarters, with an average annualized dividend growth rate of 5.6% over that time period.

But even though the trust could do very well with this portfolio, Swaringen says it continues to seek out new opportunities. It might surprise some people that it will focus a lot of attention this year on retail, which currently constitutes about 30% of the portfolio. The rise of online shopping, and the subsequent closure of thousands of retail outlets, has soured many investors on the whole sector. But Swaringen says investors just need to work harder to find great opportunities.  

“Some would say we are over-retailed,” but JLL has always done very well with grocery-anchored centers, especially ones anchored by hot retailers like Mariano's, Whole Foods and Trader Joe's. “We don't do malls and we don't do power centers.”

Trust officials took a comprehensive look at the tenants occupying the spaces next to their big grocers. And what they found strengthened their conviction that these properties would provide their 12,000 stockholders with steady returns.

“These tenants are not selling something you could get online,” Swaringen says. Instead, they tend to be service-oriented businesses, such as dentists and other healthcare, or high-traffic restaurants and shops like Starbucks.

“We're going to continue investing in this market.” 

CHICAGO—As reported last week in GlobeSt.com, commercial real estate investors that had looked with some trepidation on the new administration have seen some of their worst fears allayed. The 2016 campaign was filled with rhetoric about immigration, trade wars and Muslim bans, but that talk wasn't much help when it was time to find workable legislative majorities or design policies that could pass constitutional muster. As a result, the avalanche of news coming out of Washington, which often feels like turmoil, partially conceals the stability in many important areas of the economy.

The failure to repeal the Affordable Care Act, for example, means the world of healthcare real estate won't be roiled by sudden changes. Considerations like that are very important to real estate investors, not least because they need to see farther ahead than others.

“There is a lot of lead time in real estate,” Allan Swaringen, president and chief executive officer of JLL Income Property Trust, tells GlobeSt.com. Even industrial buildings, the quickest type of development, take about 12 months to plan, design and build. Apartment buildings can take two to three years, and major office developments between five and six years. “It creates a whole new level of risk.”

But the trust, a daily NAV REIT with a national portfolio, has just published its first quarter results, and the still developing political situation is just one reason that Swaringen sees reasons for optimism.  

“I think we're seeing some normality return,” he says. A few months ago, he was asking, “are we going to ship millions of our workers somewhere else?” Today, however, “there is a bit of a different view.” The checks and balances built into the American system have had an impact. “Now we can say, 'OK, some of the rhetoric was just rhetoric.'” 

Furthermore, the overall economy has performed well, greatly benefitting the trust's $2.3 billion portfolio of 69 core properties, which span the retail, apartment, industrial and office sectors. In the first quarter, it achieved a total net return of 1.8% on Class M shares. It has paid dividends for twenty-one consecutive quarters, with an average annualized dividend growth rate of 5.6% over that time period.

But even though the trust could do very well with this portfolio, Swaringen says it continues to seek out new opportunities. It might surprise some people that it will focus a lot of attention this year on retail, which currently constitutes about 30% of the portfolio. The rise of online shopping, and the subsequent closure of thousands of retail outlets, has soured many investors on the whole sector. But Swaringen says investors just need to work harder to find great opportunities.  

“Some would say we are over-retailed,” but JLL has always done very well with grocery-anchored centers, especially ones anchored by hot retailers like Mariano's, Whole Foods and Trader Joe's. “We don't do malls and we don't do power centers.”

Trust officials took a comprehensive look at the tenants occupying the spaces next to their big grocers. And what they found strengthened their conviction that these properties would provide their 12,000 stockholders with steady returns.

“These tenants are not selling something you could get online,” Swaringen says. Instead, they tend to be service-oriented businesses, such as dentists and other healthcare, or high-traffic restaurants and shops like Starbucks.

“We're going to continue investing in this market.”